Maruti Suzuki India : Transcript of the investor conference call - Q3, FY 2022-23

Q3 FY23 - Investor Conference Call

January 24, 2023

1 | P a g e

MSIL Conference Call Transcript 24 January 2023

Moderator:	Ladies and gentlemen, good day and welcome to the Q3 FY23 Earnings Conference Call of
	Maruti Suzuki India Limited. As a reminder, all participant lines will be in listen only mode and
	there will be an opportunity for you to ask questions after the presentation concludes. Should
	you need assistance during the conference call, please signal an operator by pressing "*" then
	"0" on your touchtone phone. Please note that this conference is being recorded. I now hand the
	conference over to Mr. Pranav Ambaprasad. Thank you and over to you sir.
Pranav Ambaprasad:	Thank you, Aman. Ladies and gentlemen good evening once again. I wish everyone a very
	Happy New Year 2023. May I introduce you to the management team from Maruti Suzuki.
	Today, we have with us our CFO - Mr. Ajay Seth. From Corporate, we have Executive Director,
	Corporate Planning and Government Affairs - Mr. Rahul Bharti; General Manager, Corporate
	Strategy and Investor Relations - Mr. Nikhil Vyas. From Finance, we have Executive Director
	- Mr. Pradeep Garg; and Vice President - Mr. Dinesh Gandhi.
	The concall will begin with a brief statement on the performance and outlook of business by Mr.
	Seth. After which we'll be happy to receive your questions.
	May I remind you of the safe harbor. We may be making some forward-looking statements that
	have to be understood in conjunction with the uncertainty and the risks that the company faces.
	I also like to inform you that the call is being recorded, and the audio recording and the transcript
	will be available at our website. May please note that in case of any inadvertent error during this
	live audio call, the transcript will be provided with the corrected information. I would now like
	to invite our CFO, Mr. Seth. Over to you, sir.
Ajay Seth:	Thanks Pranav, Good afternoon, Ladies and Gentlemen, I wish everyone a very happy new year
	2023. Let me start with some of the recent business highlights
	To strengthen our product portfolio, the Company launched 2 new SUVs, Jimny and Fronx in
	the Auto Expo 2023. With this the Company is aiming for leadership in SUV segment.
	• The Jimny, powered by Suzuki's ALLGRIP PRO (4WD) technology, carries the 50
	year-strong heritage of Suzuki's off-road prowess.
	• The Jimny comes loaded with safety features such as 6-airbags, Brake (LSD) Limited
	Slip Differential, ESP with hill hold assist, hill decent control, rear-view camera, and
	ABS with EBD.
	• The sporty compact SUV FRONX targeted at young aspirational car buyers will
	strengthen the Company's product offering in Compact SUV segment.
	• In addition to host of safety and Technology features, the Fronx is also offered with
	all-new 1.0L K-series Turbo Boosterjet Direct Injection engine.
	In the auto Expo, the Concept Electric SUV eVX was showcased to reveal the Company's plan
	towards electric mobility in India.
	2 | P a g e

MSIL Conference Call Transcript 24 January 2023

•Concept eVX is a mid-size electric SUV concept designed and developed by Suzuki Motor Corporation, Japan

•The Concept Electric SUV eVX will be powered by a 60kWh battery pack offering up to 550km of driving range.

•The Company plans to bring it to market by 2025. The Company's approach with electric vehicles is holistic with scale and localization. Earlier in March, Suzuki announced investment of INR 100 billion rupees in Gujarat towards production of BEVs and their batteries.

Coming to other product related highlights, aligned with Government's clean and green initiatives, the Company unveiled India's first mass segment Flex Fuel prototype car.

•The Flex Fuel vehicle is designed to run on any ethanol-petrol blend between 20% (E20) and 85% (E85) fuel.

•Our research shows that ethanol fuel-based Wagon R Flex Fuel prototype vehicle operating on E85 fuel will help reduce GHG emissions by 79% in comparison to a conventional gasoline-powered Wagon R car.

•The Company will introduce first Flex Fuel vehicle for the compact segment by 2025.

•Besides, the company has already announced its commitment to make its entire product range E20 fuel material compliant by March 2023.

Recently, the Company further expanded its green car portfolio to Nexa Channel by offering S- CNG powertrain technology in Grand Vitara, XL6 and Baleno. With this Maruti Suzuki now offers 14 models with factory-fittedS-CNG technology.

The Company believes in exploring a full spectrum of technologies like hybrids, CNG, bio-CNG, ethanol and electric to support Government of India's twin objective of reducing oil-import bill and Net Zero by 2070

Coming to the other recent business highlights,

•The Company inaugurated 3,500th new car sales outlet. Having presence across 2,250 cities makes Maruti Suzuki the only car company to achieve such a wide network across India.

•The Company has achieved cumulative production of over 25 million units. This makes Maruti Suzuki the only Indian company to have achieved this significant milestone in passenger vehicle production.

3 | P a g e

MSIL Conference Call Transcript 24 January 2023

•The Company has commenced exports of its highly successful premium SUV, Grand Vitara. The Company aims to export Grand Vitara to more than 60 countries across Latin America, Africa, Middle East, ASEAN and neighboring regions.

•In CY 2022, Maruti Suzuki registered an export of over 2.6 lakh vehicles, its highest ever exports in a calendar year. With the addition of Grand Vitara, the Company aims to further strengthen its position as India's leading passenger vehicle exporter.

Coming to the business environment during the quarter,

The Company entered this quarter with adequate network stock in anticipation of good demand in the festive period. During the quarter, as expected the company could maximise the retail sales. As a result, the company had about 5 days of network stock at the end of the Q3 FY23.

Pending customer orders stood at about 363,000 vehicles at the end of this quarter out of which about 119,000 orders were for recently launched models.

In Q3 FY23, the supply shortage of electronic components had marginally increased in comparison with Q2 FY23. The Company could not produce about 46,000 vehicles in Q3 this year. Limited visibility on availability of electronics components is a challenge in planning our production. The electronics component shortages are still limiting our production volumes. Our Supply Chain, Engineering, production and sales teams are working towards maximizing the production volume from available semi-conductors. The supply situation of electronic components continues to remain unpredictable.

Coming to the Highlights of Q3 (July-September), FY 2022-23

The Company sold a total of 465,911 vehicles during the quarter. Sales in the domestic market were 403,929 units and exports were 61,982 units. This was against total sales of 430,668 units comprising 365,673 units in domestic and 64,995 units in export markets in the same period, previous year.

During the quarter, the Company registered Net Sales of INR 278,492 million. During the same period previous year, the Net Sales were at INR 221,876 million

The Company recorded an Operating Profit in Q3 FY2022-23 of INR 21,230 million as against INR 9,190 million in quarter 3 of previous year.

The Net Profit for the quarter rose to INR 23,513 million from INR 10,113 million in Q3 of previous year

Highlights: 9M (April-December), FY 2022-23

The Company sold a total of 1,451,237 units during the period. Sales in the domestic market stood at 1,256,623 units. Exports were at 194,614 units. During the same period previous year

4 | P a g e

MSIL Conference Call Transcript 24 January 2023

	(9M FY2021-22), the Company registered a total sale of 1,163,823 units including 993,901 units
	in domestic market and 169,922 units in the export market.
	The Company registered its highest ever Net Sales of INR 816,790 million in the period April to
	December 2022 as against INR 582,841 million in the same period, FY2021-22.
	The Company made a Net Profit of INR 54,256 million in the 9M FY2022-23 as against INR
	19,274 million in 9M FY2021-22.
	We are now ready to take your questions, feedback and any other observations that you may
	have. Thank you.
Moderator:	Thank you very much. We will now begin the question-and-answer session. First question is
	from the line of Kapil Singh from Nomura. Please go ahead.
Kapil Singh:	Firstly, I wanted to check on the gross margins. We have seen good improvement this quarter.
	So, if you could just call it out in terms of mix and commodity benefits, how much have you got
	from both separately and also going ahead do you expect significant commodity benefits to come
	in or most of them have been realized?
Ajay Seth:	So, sequentially, there has been improvement in virtually all areas except for the fact that the
	sales promotion cost is higher this quarter, compared to the previous quarter. But if we look at
	our initiatives at the cost side and including the commodity, there has been an improvement.
	There has been significant improvement in the exchange rate. And also, there has been some
	reduction that we see in the overheads, where we've cut down on some of the expenses. So,
	overall, you will see a reduction on various accounts. Mix, of course, has a positive impact,
	because the proportion of bigger cars have gone up. So there's a favorable mix that we see in
	our portfolio. So, it's a combination of these factors which has resulted in improvement of
	profits, in spite of the fact that the sales promotion is a little elevated in this quarter. So, that's
	precisely the answer to your question.
Kapil Singh:	Okay. And sir are we expecting more commodity benefit going ahead?
Ajay Seth:	So, commodity benefit also comes with a quarter lag, now it's kind of stabilized. I don't think
	that moving forward, you are going to see more impact, because this has mostly been factored
	in now. There could be some small impact that we will see in quarter 4, not significant impact.
	And then we will have to watch the trend of the commodities moving forward for the next year.
	So, I would say that there could be a minor impact in the next quarter, not significant.
Kapil Singh:	Okay. And sir second question was on demand, just if you could share the outlook that we are
	seeing across segments or even rural versus urban, and we've launched two new models, would
	it be possible to share what kind of reception and order books we have on Jimny and Fronx as
	of now?

5 | P a g e

MSIL Conference Call Transcript 24 January 2023